12.02.08
Posted in Blog
at 12:29 am
As the global economy steadily grinds its way deeper and deeper into recession, panicky headlines no longer shout warnings of further bank failures. Instead, there is a mind-numbing procession of announcements of massive layoffs. Even though most businesses over the last twenty years had made a fetish of being "mean and lean," and continually paring their head count to improve productivity, apparently they are still over-staffed enough that the only way they can deal with a business slowdown is
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11.06.08
Posted in Blog
at 11:38 pm
During the last two decades, American business led the world to a clear preference for theory over experience. Nowhere was this more in evidence than in the financial services industry. The U.S., one of whose most iconic industrialists famously defined history as "Bunk," had always believed as a nation that a bright new idea could trump the accumulated wisdom of centuries. But this tendency was always partially offset by the conservative influence of the older and more experienced leaders who
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09.29.08
Posted in Blog
at 1:24 am
Tuesday, I collaborated in a fascinating conference that almost everyone wrapped up in the current financial crisis ignored. It was the third annual conference on securities lending, sponsored by Finadium (formerly Vodia), a small research house which specializes in lending-related issues. With almost everyone in the securities industry glued to their monitors whether they had anything to do or not, only about 50 attended, rather than the 110 of last year. Which was a pity, because, my own humble
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09.22.08
Posted in Blog
at 12:58 am
I'm afraid that, while too little innovation can stultify financial markets and retard economic growth, the present market adventure shows that one can have too much of a good thing. The rocket scientists who have kept coming up with ever-more complex instruments in order to cure the investors' various financial ailments have produced a cocktail of 'cures' which have the result of endangering the life of the patient. Not for nothing does the FDA, the regulator in actual charge of the vital industry
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09.18.08
Posted in Blog
at 3:26 pm
Self-preservation instincts are usually a good thing to have. The survival of any species usually depends upon the survival of individuals, which is why we have such instincts in the first place. But occasionally, the instinct actually gets in the way of survival. Panic responses—e.g., thrashing wildly when in fear of drowning—are an obvious case in point. But there are subtler ones. Consider the instinct many have to overeat. Biologically, one is storing up fat as a hedge against
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09.16.08
Posted in Blog
at 6:30 pm
It is dangerous to draw conclusions before the dust has settled from an event. In fact, it may be dangerous to draw conclusions before the dust has settled for many years upon an event. However, since Investment Initiatives is more useful to its clients if it can help them in the foreseeable future rather than in the distant past, I will hazard that the destruction of Lehman Brothers Holdings has underscored the following eternal verities, and that investors may draw upon them to try to avoid getting
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06.01.08
Posted in Blog
at 4:11 pm
Overlooked in the controversy regarding the Rockefellers’ dispute with Exxon Mobil over the future direction of that corporation is the fact that one of their motions had nothing to do with alternative energy sources: a proposal to split the roles of chairman and CEO. The proposal to divide Rex Tillerson’s job received an impressive 39.5% (virtually the same as last year, despite an heroic effort by management to fight the proposal) but given that the company has opposed this proposal
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05.27.08
Posted in Blog
at 4:33 pm
Law is the wisdom of the old,
The impotent grandfathers feebly scold;
The grandchildren put out a treble tongue, 

Law is the senses of the young.
—W. H. Auden
“Law Like Loveâ€
One of my favorite moments from investment meetings occurred when an analyst in his mid-30s was struggling to explain why his favorite investment idea had gone awry. This was a major consumer products company whose stock had tanked and new CEO and management team had been sacked, having
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05.08.08
Posted in Blog
at 8:32 am
—April 23rd, 2008
The boom-and-bust, euphoria-followed-by-despair cycle seems a permanent feature whenever future gain is contemplated by a mass of human beings. As Warren Buffett so aptly put it, investing in the stock market is like being in partnership with a very wealthy manic-depressive. Periodically, in his manic phases, your partner will offer you too much for your share in the business, and you should sell it to him; when he is overly depressed, he will offer you his stake in
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05.04.08
Posted in Blog
at 11:35 pm
—April 7th 2008
I have long felt that the marriage of investment bankers with stockbrokers was an unholy alliance, and that whatever its commercial justifications, it served the investment community very poorly. Now we discover that the promiscuous fusion of commercial banks, investment banks, and investment managers serves the general public and the broader economy even more poorly. I wish I could take more satisfaction from the fact I am able to say that I have told other investors
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